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The Bill will also expand the circumstances in which the OFT can consider the fitness of an estate agent to practise and, if necessary, take regulatory action against them. The OFT can already ban estate agents when they have been convicted of a specified criminal offence. The Bill will allow the OFT to ban an estate agent where there is sufficient evidence that an offence has been committed, even if there is no conviction. Furthermore, the OFT will also be able to ban an estate agent where an enforcement order under the Enterprise Act 2002 or a statutory undertaking has been breached. These changes are needed to bring the 1979 Act in line with modern enforcement practice, where civil or informal action is generally used as a cost-effective and proportionate alternative to criminal prosecution.

Part 4 includes provisions on doorstep selling. In September 2002, the National Association of Citizens Advice Bureaux—now Citizens Advice—published a report, Door to Door, which looked at a wide range of goods and services sold on the doorstep, and addressed problems that had been reported to its

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offices. The report was submitted to the Office of Fair Trading as a super-complaint within the terms of the Enterprise Act 2002.

In November 2002, the OFT confirmed that it would investigate doorstep selling. Its report, which included seven recommendations for improving consumer protection, was published in May 2004. In response, the Government launched a public consultation and on 7 September this year they published their response. As part of that response, they decided to introduce primary legislation to ensure that all consumers have the safety net of a cooling-off period for all doorstep sales, whether the visit is solicited or not.

Consumers will be protected if they are subjected to high-pressure selling and subsequently change their minds. Removing the distinction between solicited and unsolicited visits will make the law simpler and clearer for the consumer, businesses and enforcement agencies. Businesses will be able to work with one contract for both solicited and unsolicited visits, reducing ongoing costs in the production of contracts and training of sales staff. The simpler rules will ensure that businesses do not need to spend time establishing whether their visit is solicited or unsolicited.

We welcome the report of the Delegated Powers and Regulatory Reform Committee and intend to accept both its recommendations in relation to this Bill. We are seeking the relevant clearances and will table government amendments shortly.

I hope that your Lordships’ House will join me in supporting these provisions. The Bill equips enforcers to get rid of dishonest estate agents. It gives consumers a strong champion to fight their corner, and it gives them the rights and redress that they deserve. I look forward with great anticipation to hearing noble Lords’ contributions to this important debate.

Moved, That the Bill be now read a second time.—(Lord Truscott.)

3.21 pm

Baroness Wilcox: My Lords, it is a pleasure to speak in this debate, especially as it is my first legislative task in my new role as shadow spokesperson on DTI matters. I congratulate the Minister on his new post and welcome him to his place in what is a first for us both. I am sure that he will join me in welcoming in the European Union another first: the recent appointment of a dedicated commissioner for consumer protection, Mrs Meglena Kuneva of Bulgaria. I am sure we all look forward to meeting and listening to her.

I declare an interest as the former chair of the National Consumer Council, as the current president of the National Federation of Consumer Groups and the vice-president of the Trading Standards Institute. I am delighted to open the batting under this brief in a field with which I am familiar.

We had the opportunity to debate the Bill in your Lordships' House a week ago today, albeit with a lighter touch. I am pleased to have the opportunity to spend a little more time reflecting on its provisions and implications.



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As we have heard, the Consumers, Estate Agents and Redress Bill exists as a result of a DTI White Paper, A Fair Deal for All—Extending Competitive Markets: Empowered Consumers, Successful Business, the OFT’s two-year report on estate agency, and various DTI consultations. I shall address the three main areas of the Bill: the merger of the NCC, Postwatch, Energywatch, the Irish postal services committee and the Welsh and Scottish consumer councils; the new provisions for solicited sales; and the proposed amendments to the 1979 Act.

While I am in favour of any plans to improve consumer understanding and create a more transparent system of complaint and redress, I am concerned by the Government’s proposed method of doing it. One needs only to point to Natural England as an example of the creation of a non-departmental public body from previously independent bodies—it is now over-budget and understaffed—to feel some trepidation at the proposals before us. We are already being lobbied by single-issue and consumer groups which are expressing anxiety about the new body, Consumer Voice.

During its 31 years of existence, the NCC has been a low-cost guerrilla force for consumer affairs. It is vital that such a body, funded by and yet independent of government, is not turned into a large, process-led home for government policy. The National Consumer Council has always been consumer driven. It has driven improvements in consumer affairs worldwide. Since its establishment by the noble Baroness, Lady Williams of Crosby, when she was on the Labour Benches in another place, it has provided the benchmark for consumer protection. It has been largely left alone by successive governments of every hue.

So I was concerned to read in paragraph 2.108 on page 31 of the regulatory impact assessment that as a result of the merger there is,

Given that Her Majesty's Government are clearly aware of the potential pitfalls of a broad merger such as this, can the Minister inform noble Lords how plans for the new consumer voice are going to be set to safeguard the National Consumer Council’s precious independence and independent policy development? Indeed, the NCC has raised concerns about the proposed merger. It is concerned about the precise function of the devolved elements of the new NCC and how those bodies will operate in devolved institutions. Can the Minister shed some light on that? In its briefing to me, the NCC has been keen to ensure that advocacy, redress and advice should be provided by specialist organisations. Can the Minister, in the light of the regulatory impact assessment’s concerns, assure noble Lords that that vital specialist advice will not be lost?

It is vital that this merger is not merely treated as a cost-cutting exercise. I was concerned to read in the regulatory impact assessment that the DTI hopes to make savings on the complaints procedures by cutting complaints. It is a common myth of the public sector

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that complaints are a negative component of consumer relations. In fact, the opposite is true: complaints systems are the most effective representation of the needs and wishes of consumers. Companies such as Marks & Spencer or Tesco, which measure their footfall and measure the number of complaints that they get against that footfall, value them highly as they are the route to improving customer service and the quality of the product. I hope that the Minister can reassure noble Lords that cost-cutting will not be a priority over consumer service.

The Conservative Party wholly supports increasing consumer confidence and capability. We believe that that is best achieved by working hand in hand with good business. Through sharing responsibility, customers and provider relationships are strengthened and we on these Benches would welcome any Government’s commitment to make Britain the best country in the world for consumers by 2008, as this Government have done. On present form, that seems unlikely; our British consumers are dangerously in debt; the figure stands today at more than £1 trillion. Why have the Government not taken notice of those warning signals? In addition, 56 per cent of women and 43 per cent of men admit to Christmas debt caused by poor financial planning and, in the first three months of this year, there were as many insolvencies in this country as there were in the whole of 1997. Yet the Government seem to be oblivious, and we have heard of no engagement with this state of affairs from their Benches. Something is going very wrong, and we are a long way off this Government’s commitment. We are in debt and we are going the wrong way.

On estate agents, it is important to face the facts. Last Monday, the Minister stated that 21 per cent of sellers and 23 per cent of buyers experienced problems with their estate agents. However, a different set of figures is much higher; a Which? survey showed that 70 per cent of consumers believe that agents give misleading information about properties and 90 per cent believed that their estate agents cannot usually be trusted. That paints a very different picture and a very bad one; it is very important to get these facts right. It is important because approximately 1.8 million people buy or sell a house every year. As the Minister has said, for most people it is the largest transaction that they will ever make, and there is a fantastic opportunity in this Bill to improve confidence for the consumer.

There is a real distrust surrounding estate agents. I wonder why, given that 70 per cent of all estate agents are already signed up to voluntary regulation and have codes of practice and qualifications under the NAEA and the RICS. There is real ambition within the industry to raise standards and, therefore, its reputation. The NAEA and the RICS warmly welcome the creation of a statutory ombudsman and redress scheme. I, as do the trade bodies, wish the scheme great success.

However, we remain concerned that redress will not adequately deter malpractice. I was concerned in my reading of the Bill that in reality redress will be a mere safety net and will not act as a deterrent. Noble Lords will be well aware that England does not have a

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positive licensing scheme for estate agents. Anyone can set up as an estate agent without any proven experience or aptitude. It is important that the redress scheme is tied closely to existing regulations. In light of that, the extension of the powers of the OFT in holding estate agents to account under a redress scheme is a welcome addition, but I am anxious that it may not go far enough.

There are certain caveats in the Bill that I am concerned about. In new Section 23A, to be added to the 1979 Act under Schedule 6 to this Bill, it will be possible for the Secretary of State to limit not only the types of complaint that may be made under a redress scheme, but the type of people who can make a complaint. I was as surprised to read this as I was to discover in the Explanatory Notes that a redress order,

I understood that the Bill would apply to all consumers in the estate agency market. I hope that the Minister will be able to reassure myself and other noble Lords that the Bill will do more than provide a smokescreen for an industry that is in serious need of a standard redress system. I should be grateful if the Minister could describe in detail what form a redress scheme will take. Is it likely that there will be more than one scheme? If so, how will consumers be reassured that both schemes are of the same high standard? I understand that the OFT will have the power to create a redress scheme without the approval of the Secretary of State, and that the Secretary of State will have the power to create his own scheme which will not need approval from the OFT.

I am concerned about how consistency between the two potential schemes will be achieved so that they are transparent and inspire confidence in consumers seeking redress. It would be ironic were this Bill to champion transparency at the first point of contact with consumers, in Consumer Direct, only to create confusion in the very system that is set to provide redress for consumers where the initial stages fail to help.

On solicited sales, “doorstep selling”, while the new provision for solicited sales, introducing a cooling-off period equating to the consumer rights for unsolicited sales, is the right direction of travel, I have concerns about the implications for small off-premises traders such as plumbers and electricians and the possible impact on consumers. Can the Minister reassure me that a new cooling-off period for all solicited sales will not result in, for example, a plumber refusing to fix a broken boiler until the cooling-off period has been completed to avoid the consequences of a customer changing their mind? If this were to happen, how ironic it would be that we had supported a Bill that sought to improve consumer service in the watchdogs, but had worsened it on the ground.

While there is much that is positive about the Bill, I remain cautious about the detail of many of these proposals pending answers from the Minister on

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structuring, costs and the detail of transition proposals in the following stages of the Bill. These Benches are committed to creating confident consumers. Where we believe that the Bill will achieve that, we will certainly support it.

3.34 pm

Lord Borrie: My Lords, I commend the Bill to noble Lords and very much welcome the positive remarks that have just been delivered by the noble Baroness, Lady Wilcox, particularly with regard to the estate agents redress scheme, which will cover estate agents generally rather than some two-thirds of them. I also welcome her positive remarks about the National Consumer Council. It has not always been thus from the Conservative Party. Soon after the Conservative Party, under Mr Edward Heath, was elected in 1970, it carried out its pledge to abolish the then Consumer Council, which had been set up less than eight years earlier. That was an unfortunate destructive act, because the Consumer Council had established itself as an authoritative and considered voice for the consumer, whose interests were so often neglected and ignored by other interests, represented by the CBI, the trade unions and the Government.

The Labour Party opposed the abolition of the Consumer Council, and one of its first acts on resuming power in 1974 was to create the present National Consumer Council, as the noble Baroness has recognised, to look after the interest of consumers in general and—I emphasise this point because it was emphasised at the time—the interests of less affluent consumers in particular. The first chairman was later a Member of this House, who is sadly now deceased; Lord Young of Dartington. When the noble Baroness, Lady Thatcher, became Prime Minister, she allowed the National Consumer Council to continue. Mind you, she did abolish the Price Commission, which also protected consumers, but the National Consumer Council continued. Two of its later chairmen now grace the Conservative Benches in this House; the noble Baroness, Lady Wilcox, who has just spoken, and the noble Baroness, Lady Oppenheim-Barnes, who will speak next. The former Labour Minister, my noble friend Lord Whitty, who will be speaking later in the debate, is the current chairman.

The 30-plus years of the National Consumer Council have been years of outstanding, productive effort in making the case so often for stronger consumer protection in many fields, and making that case on the basis of through research. That has always been regarded as essential. This Bill has to take account of the fact that a number of industries have been privatised or deregulated, and various specialised, particular consumer representational bodies have been created. It makes sense in the Bill—although the noble Baroness has raised some perfectly pertinent questions about ensuring that no little bit gets lost sight of when they are merged—that Energywatch, Postwatch and others should be merged with the National Consumer Council.

I was rather astonished, however, not by what the noble Baroness, Lady Wilcox, said today, but what she said a week ago, on 27 November. I see no basis for the

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noble Baroness asserting in the debate on the gracious Speech that the National Consumer Council is now set to be “another government mouthpiece”. I hope that she will reconsider that point, because it is far from the mark. The National Consumer Council will continue to be, and is intended to be, independent. Anything else would be of no use to Her Majesty’s Government—whether Labour, Conservative or any other. I have noticed over the years that the National Consumer Council has overlapped somewhat with the Office of Fair Trading in giving information, advice and education to consumers. Both it and the DTI have been engaged in Consumer Direct, the valuable telephone and online consumer advice service. It does not matter too much if there is some overlap of that kind.

High-pressure salesmanship has plagued consumers in various ways for many years. A deterrent against high-pressure salesmanship on the doorstep and in your own home has been the statutory cooling-off period, which gives the right to cancel contracts. But that right has not been available if the consumer has expressly requested or solicited the visit. Therefore, I welcome Clause 58 of the Bill, which extends consumer rights to cancel when home visits have been solicited by the consumer. Surely, that is right. Whenever a consumer is visited at home, there is a risk of undue pressure to sign up to some sales proposition simply to get rid of the persistent and, no doubt, endlessly talking salesman. After all, you can hardly walk out of your own home like you can from a shop.

It must be the lawyer in me that points out that the additional consumer protection in Clause 58 comes under the heading “Miscellaneous and general”. I suggest to the Minister that some of us might consider what other matters might be put into that part of the Bill. The Minister will recall that earlier this year, when the final touches were being put on the Bill, a most unfortunate incident took place that has been rippling for many weeks—the collapse of Farepak. That company had taken some £40 million in small amounts from less affluent consumers who sought to save to buy Christmas presents. It was suggested that the company should have been required by law to ring-fence those consumer savings instead of being able to misuse those savings on all sort of extraneous premises.

I am thinking of solicitors’ client accounts. I am also thinking of estate agents—given that they will receive a lot of knocking in this Bill—whose must hold deposits in separate accounts. It is not unknown that such a law should be required. At Second Reading, I confine myself to asking whether the Minister has considered, or whether he will consider, a new legal requirement on such saving schemes to protect consumer money. Would not Part 4 of the Bill be an appropriate vehicle?

Part 3, to amend the Estate Agents Act 1979, is one of the most important parts of the Bill. Clause 52 requires all estate agents to participate in a redress scheme. The 1979 Act was passed into law when I was Director-General of Fair Trading, and my office was given the power to ban estate agents from acting in the manner to which I have referred in certain circumstances. It is a type of negative licensing system

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and has frequently been used when, for example, an estate agent is convicted of defrauding customers by stealing deposits paid on a house purchase. There are already broad powers to ban estate agents who are considered to be unfit to practise, but I welcome the extended powers in this Bill.

The Office of Fair Trading’s local agents are the trading standards officers in local authority departments. The Bill gives them additional powers which no doubt some lawyers in the Liberal Democrat Party will want to watch with great care. On the face of it, such provisions would make the banning powers under the Estate Agents Act more useful.

Many estate agents have belonged to a redress scheme administered by the Ombudsman for Estate Agents and his staff, who work under the supervision of its council. The current chairman is the noble Baroness, Lady Shephard of Northwold, who sits on the Opposition Benches, although she is not in her place today. I was a member of the council for the estate agents’ ombudsman in its early years in the 1990s, under the chairmanship of someone from our Benches—the noble Baroness, Lady Mallalieu. The Ombudsman for Estate Agents has done the immensely useful job of investigating complaints and granting—at any rate modest—compensation where appropriate. In theory, the compensation can be up to a maximum of £25,000 but I do not think that it has reached anywhere near that figure in any case. Unfortunately, a large number of estate agents—roughly one third of the total—have declined to join and the Government’s proposals are intended to fill that obvious deficiency. The Government know that only too well, because it is the basis for the changes in the Bill. The Bill does not specify that estate agents must join the present Ombudsman for Estate Agents scheme but if that scheme’s record, constitution and so on pass muster—or might do so with change—it may become the approved scheme for the Office of Fair Trading and the Secretary of State. Having a number of schemes competing, no doubt, to provide the best service for customers, would seem a rather odd system of adjudication in this country. I do not think that it occurs in ombudsman schemes in insurance, banking and so on.

There is much to commend in the Bill. The House will, when we are in Committee, fulfil its usual and useful role of making detailed improvements.

3.46 pm

Baroness Oppenheim-Barnes: My Lords, when I looked at the speakers list, I saw that I was fortunate enough to be the last speaker before the Statement. I then saw that I was to follow the noble Lord, Lord Borrie, who is the great acknowledged expert in this field. That was one of the very good reasons why I reappointed him to the job of Director-General of Fair Trading when I was Minister of State.


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